China’s fiscal deficit manageable: Premier

Beijing, March 13 (Xinhua) China’s fiscal deficit is manageable, Premier Wen Jiabao said here Friday. While meeting the press after the annual parliament session, Wen said that his judgement was based on the Chinese government’s continuous efforts to cut its deficit in the past few years.

“China’s national revenue has kept on increasing in recent years due to the economic development, which leaves us room for deficit and debt hikes,” said Wen.

The country’s deficit was reduced to 180 billion yuan ($26.32 billion) in 2008, accounting for 0.8 percent of its gross domestic product (GDP). The figure was 319.8 billion yuan in 2003, accounting for 2.6 percent of the GDP, said Wen.

China issued 140 billion yuan worth of treasury bonds in 2003, and the figure plunged to 30 billion yuan in 2008, according to Wen.

“We should fully understand the importance of the pro-active fiscal policy,” said Wen, adding that the “most direct, forceful and efficient” measure to tackle the financial crisis is to increase fiscal input as soon as possible.

With the economy turning better, the revenue of the government will also increase, said Wen.

“This means we should view the problem of fiscal deficit from both sides,” Wen told reporters.

He also stressed public supervision over both central and local fiscal operations, to ensure that fiscal input will go to the most important and pressing areas and result in assets that will benefit future generations.

China has set this year’s central government deficit at 750 billion yuan, 570 billion yuan more than last year.

In addition, the state council will allow local governments to issue 200 billion yuan worth of government bonds through the Ministry of Finance, which will go into provincial budgets, Wen said in his government work report to the National People’s Congress.

These will add up to a 950 billion yuan deficit, accounting for less than three percent of the GDP, according to Wen.